Bookkepping Question

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GrassRoots Lawn Care

I have a question pertaining to accounting. In my expenses log, I have classifications for &quot;Advertising&quot;, &quot;Office Supplies&quot;, Vehicle Expenses&quot; ect. in order to make a Profit and Loss statement at the end of the year for my Schedule C. What column should I put materials used for landscaping? Materials such as sand, mulch, plants, ect.? Clearly these are expenses, but they are not listed under &quot;deductable expenses&quot; in my accounting books. I need some clarification. Thanks.<p>----------<br>Mike Reynolds,<br>GrassRoots Lawn Care, Florida


LawnSite Member
East Tennessee
Mike,<br> I pretty sure that materials are considered reinbursable expences. I use an accountant so I don't know how they are listed on the schedule &quot;c&quot; but that is how he told me to make out the folder to keep receipts in. Hope that helps! <br> SKD


LawnSite Silver Member
okay, I'm not to good with the accounting stuff but from what I've read of Nillson's and Phagan's books, you should be using a P&L statement monthly so you can see and fix any problems before they get too large. I don't think materials for a specific job are deductable because your not paying taxes on them when you buy it (I hope your not) Just be sure your adding in the tax when you sell it to the customer and put it aside. Actually I just confused myself. I don't know what the hell I just got myself into. Maybe someone could give us all a lesson a little deeper into accounting. Sorry!!<p>----------<br>&lt;a href=&quot;;&gt;&quot;Guido&quot;&lt;/a&gt;<br>David M. Famiglietti


LawnSite Member
ALL Materials are deductable!<br>just make a cat. for materials and list them there.<br>I always put the purchase price in one column<br>then put the sales tax next to it and let my accontant figure how to split.<br>REMEMBER!!!!!! ANYTHING!!! that is used in your buss. is deductable.


LawnSite Senior Member
Dennis is correct. <p>Deduct anything you spend on the business and save all documents pertaining to it. I do all my own book work after having an accountant for the first couple years and if there's one thing I've learned it's that everything is deductible, provided you have the documentation to back it up...<p>The IRS takes too much so be sure to take back whatever you can!<p>-TGC

bill phagan

Mike,<p>Suggest you convert to a MONTHLY Profit and loss statement via quickbooks or other accounting software. Critical is setting up the formatting of the info based on YOUR business and the chart of accounts. Ie. income streams, direct cost per stream, etc. A solid P&L is your financial roadmap depicting income streams, direct job costs, overhead expenses and net profit.....You should also be receiving a balance sheet at least quarterly.


LawnSite Bronze Member
Somerset, NJ
The schedul C designation is Materials/Supplies Cost of Goods Sold.<br>Guido,<br>Your response is trickier because what you were talking about is different in each state. In my state (NJ), if I have the proper tax forms and I buy fertilizer to apply for a customer, I don't have to pay the sales tax to the supplier, because I am providing a taxable service. This is to avoid &quot;double jeopardy&quot; (paying the same tax twice) However, if I do landscape work that is a capital improvement to a customer's property, such as planting a new lawn where there was woods before, I now pay the supplier the sales tax for the starter fertilizer (and pass that cost to the customer), and the customer doesn't have to pay sales tax on the labor (not a taxable service). Well that's enough tax confusion for now.


LawnSite Member
Gross Sales Revenue<br>- CGS(Daily operational expenses: gas,oil,matierals,ect.) = profit or loss for Schedual C. - less deductable expenses = taxable income to be inculded on 1040. subject to SE tax.


LawnSite Senior Member
NE Ohio
Grassroots & all-<p>Materials and all other items that you use in your everyday business can be written off. Materials are Cost of Goods Sold. That means that they are in their own class or account. Your profit & loss statement should look somewhat like the following:<p>Gross Sales <p>- COGS<br>-------------<br>= Gross Profit<p>- advertising<br>- auto<br>- gas<br>- etc..<br>- etc..<br>--------------<br>Income from operations (Gross profit - all expenses)<p>+ other income<br>- other expenses<br>-------------------<p>Net income (loss)<p>Hope this helps. I'm an accountant so if anyone has any questions please feel free to email me.<p>Good Luck!<p>Mike<br>Greenkeepers

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